AUSTRALIA: An Introduction to Australia

Dispute Resolution: The Bar

2018 was a busy year for the courts and 2019 looks to be even busier.

On 4 February 2019 the Commonwealth Government released the final report of the Banking Royal Commission. The Commissioner has made more than 20 referrals for further action to financial services regulators, involving the conduct of nearly all of Australia’s major banks. These referrals involve the potential for both civil and criminal prosecutions. In anticipation of the final report, and in response to revelations during the Commission’s public hearings last year, the Government had announced significant additional funding for financial regulators to assist with enforcement proceedings, and many of these actions are anticipated to commence this year. Disclosures during the Commission’s public hearings also gave rise to a series of class actions against financial institutions. The Government has committed to take action in response to all 76 of the Commissioner’s recommendations.

2019 will also be a very important year for regulatory litigation in another respect. This year will see committal proceedings (at least) in the first two criminal cartel proceedings ever brought by the Australian Competition and Consumer Commission (ACCC) involving individual respondents. These proceedings will be very important for the ACCC’s cartel enforcement program. When they go to trial, the proceedings will provide a first test for the Federal Court in conducting criminal jury trials under the new Federal Court Rules introduced for this purpose, as well as valuable insight into how juries will address complex economic crimes such as cartel offences.

The number of class actions filed in the court continued to climb steadily in 2018. Recent research reviewed by the Australian Law Reform Commission (ALRC) in its December 2018 report into class action proceedings and third party litigation funding found that although class action proceedings make up only a small proportion of the total proceedings filed in the Federal Court, due to the number of parties and the complexity of the proceedings, they may have a significant impact on the operation of the court system.

Further, the ALRC found that the proportion of class action proceedings filed in the Federal Court receiving third party litigation funding has increased steadily, to almost 80% of matters filed in 2017-18.

There are a number of significant legal issues arising out of litigation funded class action proceedings that will be addressed in 2019. In February 2019, there will be an inaugural joint sitting of the New South Wales Court of Appeal and the Full Federal Court to consider the constitutionality of common fund orders in two separate class action proceedings brought against Westpac (in relation to life insurance premiums) and BMW (in relation to faulty airbags). Common fund orders allow the plaintiffs’ lawyers and funder to charge fees to all members of a class, not just those signed up to their class. While courts in Australia have made many such orders, Westpac and BMW are arguing that they offend s 51 (xxxi) of the Constitution which prohibits the acquisition of property except on just terms.

The Federal Government is expected to respond this year to the wide ranging recommendations made by the ALRC in its report, including granting courts express statutory powers to make common fund orders, allowing class action lawyers to charge contingency fees, granting courts new powers to resolve the rising incidence of competing class action proceedings and reduce the risk of forum shopping and require settlement administrators in the Federal Court to report to group members and the Court outlining the distribution of settlement funds. The ALRC also recommended increased court supervision of litigation funders in lieu of a licensing regime.

Shareholder class actions are a significant (and growing) proportion of class actions in Australia. The ALRC has recommended that a separate inquiry be held into the substantive law underpinning shareholder class actions. A key issue in shareholder class action suits is how to measure a shareholder’s loss. In cases where breaches have led to a company’s shares being inflated in value, should the measure of loss be the difference between the amount paid for the shares and the amount received when the shares were sold, or should it be based on the difference between the price paid for the shares and their true value at the time of purchase? Light may be shed on this question in the current Sirtex proceedings in the Federal Court.

On the intellectual property front, the flow of patent litigation is expected to continue in 2019, despite an only modest increase in the number of standard patent filings and a decline in provisional filings in the Patent Office over the last few years. The Lundbeck patent litigation against major generic pharmaceutical companies, including Sandoz, is set to continue in 2019 with an appeal having been filed by Sandoz and a cross-appeal to be filed by Lundbeck in the Full Federal Court, as well as parallel proceedings in the Patent Office relating to Sandoz’ licence application.

Further, after a period of relative inactivity, a number of rate setting cases are set to be heard by the Copyright Tribunal in 2019. There will also be some activity in the copyright field through arbitral proceedings – there is a growing trend towards the use of private arbitrations in this field.

On the topic of arbitrations, the High Court is expected to hand down a very important decision this year addressing the scope of private arbitration clauses. The High Court is expected to determine whether the scope of arbitration clauses should be restricted to disputes “governed or controlled” by the relevant agreement (a position favoured by the New South Wales Court of Appeal in Rinehart v Welker) or given a wider scope on the assumption that the parties to an agreement are likely to have intended that any dispute arising out of the relationship into which they have entered be decided by the same tribunal (a position favoured by the Full Federal Court in Hancock Prospecting Pty Ltd v Rinehart).

Tenth Floor Chambers
Level 10 - Wentworth Selborne
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